"The flood that caused a drought", with Alex Nikolsko-Rzhevskyy (Lehigh University) and Oleksandr Talavera (University of Birmingham), Economic Inquiry, (2023).
Abstract:
To determine how an exogenous supply shock affects product availability, prices, and price-setting behavior, we analyzed a unique dataset representing a natural experiment concerning the 2011 flood in Thailand, which affected the production facilities of Western Digital, the world's largest producer of hard drives. The natural disaster impacted the overseas inventory of hard drives in the United States, where availability declined by more than 40% and price indexes increased by as much as 38%. However, our findings suggest that such supply shocks, when transmitted to either substitute or complementary products, are likely to be absorbed within production networks.
"Quality and price setting of high-tech goods", with Yuriy Gorodnichenko (UC Berkeley) and Oleksandr Talavera (University of Birmingham), Economic Modelling, (2021), 98, pp.69-85.
Abstract:
This paper investigates the link between product quality and price setting for central processing units (CPUs). Using thousands of price quotes from a popular price-comparison website, we find that market fundamentals, such as the number of sellers, median price, share of convenient prices and level of seller stability, are important factors for explaining price stickiness and price dispersion. We demonstrate that calculations of price inflation require conditioning not only on CPU quality, but also on market fundamentals to ensure that CPU attributes are priced correctly. Failing to do so can result in an understatement of CPU price deflation in the sample period.